Promoting Competition in the Natural Gas Industry

418 Pages Posted: 30 Jul 2002

See all articles by Darryl R. Biggar

Darryl R. Biggar

Australian Competition and Consumer Commission

Date Written: October 23, 2000

Abstract

This document (of 418 pages) comprises the proceedings of an OECD roundtable on promoting competition in the natural gas industry, held in February 2000.

Natural gas is a key source of energy for OECD countries, both in its own right and as an input into the production of electricity. Regulatory reform in this sector shares both important similarities and important differences with regulatory reform in other network industries. Like other network industries, regulatory reform in natural gas involves promoting competition in the competitive segments of the industry (particularly competition between gas producers), the development of a robust regime for access to the remaining essential facilities, and structural separation between the competitive and non-competitive segments of the industry. OECD countries have pursued each of these steps, licensing independent producers, pricing access to pipeline infrastructure and separating gas production from transportation (although long-term take-or-pay contracts make this last reform more difficult). Unlike other network industries, however, the structure of the industry varies widely from country to country according to the number of domestic gas producers, the geographic location of pipelines and the uses to which natural gas is put. Countries which rely primarily on imported gas have less to gain from domestic reform and much to gain from reform in producing countries. As OECD gas sources diminish and reliance on imports increases, regulatory reform in natural gas will increasingly become an issue for international trade.

This document consists of a background paper by the Secretariat, submissions from 18 OECD countries and a summary of the oral discussion.

Keywords: Natural gas, deregulation, take-or-pay contracts, transmission pipelines, transmission pricing, vertical separation, natural gas mergers

JEL Classification: L43, L71

Suggested Citation

Biggar, Darryl R., Promoting Competition in the Natural Gas Industry (October 23, 2000). Org. for Econ. Co-operation & Dev., Best Practice Roundtables in Competition Policy No. 30. Available at SSRN: https://ssrn.com/abstract=318767 or http://dx.doi.org/10.2139/ssrn.318767

Darryl R. Biggar (Contact Author)

Australian Competition and Consumer Commission ( email )

GPO 520
Melbourne, VIC 3001
Australia
+61-3-9290-1441 (Phone)

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